Why paywalls won't help most big newspapers

A few years ago, I moved a small local newspaper's online edition behind a paywall. Most free content was removed from the web. Instead, we sold a PDF of the newspaper. Web traffic plummeted from about 15,000 views a month to about 8,000. The PDF edition attracted only a few hundred subscribers on top of the daily print run of about 9,000.
In other words, it was a big success.I know what you're thinking! "How is that a success? You lost all your traffic and only gained a handful of paying customers!"
It was a success because the Hobbs News Sun's website went from losing money—it generated no revenue and occupied employees for hours each day—to making enough money to sustain itself.
This isn't a counter-argument to what we often write about here: for major publishers, paywalls represent a desperate floundering in the face of death. But recognizing why it's good for some throws light on why it's bad for most. And here's why it was good for us:
• We made negligible ad revenue from the website. Traffic was too low for affiliate schemes or adsense to make any money. The local advertisers had no imagination, and it was difficult to convince ad sales staff to push it on them. While we were going from nothing to something, today's big publishers are trying to maintain something they already have.
• Readers had no-where else to go for professional local journalism. The Lea County Tribune fills the "happy society page" niche that newspapers often ignore, but that's it. Even the radio stations would often just read our stories on the air. Bottom line: no-one else is doing written reporting there. There weren't even any local bloggers doing their own thing.
• The paper's small size meant we could get away with using PDF files. We used them because PDF qualifies as paid circulation with the Audit Bureau of Circulation, which means online views counted for advertising purposes just like selling copies of the print edition.
The critical point here is that advertising is still what makes money for news, even when there's a cover charge. Paywalls aren't just sold to readers. They must be sold to advertisers. Paid walls make the eyeballs behind them much more valuable.
To succeed with paywalls, then, publishers need not only an established monopoly on something valuable (local news, scoops, reporting quality) but also a plan to translate that into advertiser interest. Paywalls alone, unless they are ridiculously expensive, just won't be enough.
(There were, however, other reasons to erect a paywall at the News-Sun. For example, legal counsel convinced it not to permit the essential ingredient of a successful website: user-contributed content. The reason given was that the potential liabilities involved haven't been settled by a definitive SCOTUS ruling. Which is absolutely true, of course. Just as it is true that the risk of exploring the pyramids hasn't been conclusively settled until we've proven that we won't be attacked there by golden unicorns.)
It'll eventually be time for the News-Sun to do something fancier than plain-jane paywall PDF. But if that's still paying its way, why bother? Publishers can make a go of paywalls as long as advertisers and readers have few options and they can maintain the status quo.
Which would, of course, count out just about almost all of the major publishers currently thinking of implementing one.
Photos:Ray Phua and Joriel

That is way companies lobby governments have to put walls around them (copyrights, patents, whatever) or do some of the dirty work themselves (paywalls) in order to subvert the natural order of things.

It may be commercially sensible to do so, but the damage that it is doing to the dissemination of culture and information is incalculable .

Tzctlp argues that patent law and copyright cause “incalculable” damage to the “dissemination of culture” (whatever that means).

Tzctlp, copyrights and patents –and variations on them, like Creative Commons– are tools designed to protect creative people. The principle is honorable and worth strongly defending: The principle is that I should be able to be compensated for my intellectual labor, just as someone else should expect to be compensated for their manual labor.

Yes, these tools can be abused, just like any human tool. A hammer can build a house or be a weapon. It’s our challenge to be sophisticated, and wise, in our use of tools, Tzctlp.

That’s not a bad idea, hobomike. World and national news is available through plenty of free channels. Where I’m feeling the hurt is LOCAL news.

Maybe if the local paper stopped paying to syndicate state and national stories, they’d save money? I don’t need yet another source telling me the same info that’s all over the net. I want LOCAL news, and I’m not willing to pay $10 a month for a rag that’s 50% shit from AP and Reuters that I already know, 25% fluff, and 25% meaningful local reporting.

But I would pay $2.50 a month for just the insightful local reporting, without all the extra junk.

This will generate revenue for newspapers. If a credit card is being used there is a way of identifying people.

There are a couple of major newspapers serving the city I live in. I swear that the comment sections are filled in by staffers in political parties.

Some newspapers limit what stories you can comment on. Now there should be three categories;
i)stories that you are free to comment on;
ii)stories that would receive too many bad comments so no public comment section is available;
iii)a comment section that you have to pay to post to.

The local rag in my area, Newsday, just switched over to a paywall. They are charging $5/week to access the website. It would be cheaper to subscribe to the actual paper, except that the best use for the paper is to line my parakeet’s cage. It is just a collection of AP newsfeeds anyway, so I’ll just go to any of a million other sites for the same coverage.

The plain text of each page is available to subscribers, IIRC. It’s a small paper so PDF wasn’t too troublesome, and we used a custom distiller job to keep file sizes down. Also, we made each page’s PDF individually available from a plain html index, a tiny usability thing that radically improves the PDF experience.

But we always knew it wasn’t perfect, that it was a substitute for real HTML.

thanks, usability and searchability was my concern. some things behind a paywall make sense to me, nature/acm/whatever journals for instance, but can’t see where to set a price for local news for it to make any sense from the consumers pov vs a print edition, where grandma can cut out some obituary or an article for her scrapbook.

It would work for the rag I’m at only if our competition was to succumb. The saving grace of our print version is that we can’t post a lot of pictures because they eat up space. I live in a sports crazed, beauty pageant nut county. It doesn’t hurt to have ace photographers and good print quality.

Yup information â€œwants to be free,â€ but reporters still need to put food in their pieholes, which requires pies — whoops meant to say it requires PAYCHECKS. Which is why news providers need to experiment with a mix of free and subscriptions and paywalls and [insert other revenue ideas here].

The Hobbes situation shows why one size doesnâ€™t fit all. A simple, important thing to remember when debating the transformation of the Fourth Estate.

Nice to see something that isn’t the typical hyperbole fallacy that overwhelms this place. Too often I see the Utopian hippy “Everything is free” fluff which has yet to work IRL. This story shows there are actually different levels of ‘free’ and ‘success’.

Phoulx, I’ve seen as many or more unrealistic business plans come out of the conservative side of the old culture wars as I’ve seen come out of the more utopian end of things. The most recent Wall Street bailouts would pay for one hell of a lot of start-ups.

You know what I don’t see a lot of? Hippies. Why not blame Whigs or Muggletonians? It would make about as much sense.